Business Context and Reporting Period
Motorsport Games Inc. filed this Form 8-K on January 27, 2023 under Item 8.01, Other Events. The filing addresses Nasdaq’s minimum publicly held shares requirement and provides an updated beneficial ownership table as of January 27, 2023. The company’s Class A common stock trades on the Nasdaq Capital Market under the symbol MSGM.
Key Financial and Capital Metrics
- The filing does not provide revenue, earnings, cash flow, margins, debt, liquidity, or other operating financial metrics.
- As of January 27, 2023, the company reported 1,358,975 shares of Class A common stock and 7,000,000 shares of Class B common stock outstanding.
- Class A shares carry one vote per share; Class B shares carry ten votes per share.
- Motorsport Network, LLC beneficially owned 700,000 Class A shares and 700,000 Class B shares, representing 92.12% of total voting power.
- Directors and executive officers as a group beneficially owned 37,708 Class A shares, or 2.35% of Class A shares and 0.44% of total voting power.
Material Changes Versus the Prior Comparable Period
- The company previously notified Nasdaq on November 11, 2022 that it did not comply with Nasdaq Listing Rule 5550(a)(4), which requires at least 500,000 publicly held shares.
- Nasdaq issued a deficiency letter on November 14, 2022.
- Under a December 9, 2022 purchase agreement with Alumni Capital LP, the company issued an aggregate of 191,620 Class A shares in several transactions from December 9, 2022 through January 27, 2023.
- The January 27 issuance consisted of 44,000 Class A shares. Following these issuances, the company reported 652,423 publicly traded Class A shares, exceeding the 500,000-share minimum described in the filing.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Nasdaq requested that the company file with the SEC and Nasdaq, by May 15, 2023, a public document containing its current total shares outstanding and a beneficial ownership table consistent with SEC proxy rules.
- The filing is intended to address the Nasdaq deficiency; it does not state that Nasdaq has formally determined the company’s continued compliance or closed the matter.
- The reported capital structure creates substantial voting control for Motorsport Network, LLC because of its Class B holdings and ten-votes-per-share rights.
- The ownership table includes vested options held by certain former directors and executive officers. Exercise prices range from $39.40 to $238.60 per share for the disclosed options.
Important Facts for Investors to Verify
- Confirm Nasdaq’s final determination regarding compliance with the 500,000 publicly held shares requirement.
- Verify the number and ownership of publicly held Class A shares after all issuances and any subsequent transactions.
- Review the December 9, 2022 purchase agreement with Alumni Capital LP for issuance terms, dilution, and investor rights.
- Assess the implications of Motorsport Network, LLC’s 92.12% voting power and the company’s dual-class capital structure.
- Review subsequent SEC filings for changes in shares outstanding, beneficial ownership, option exercises, and any additional Nasdaq requirements.